Philip Clarke has made a decisive break from the Sir Terry Leahy era at Tesco
by moving the supermarket chain towards an exit from the US and ousting
long-serving Tim Mason as deputy chief executive.

Mr Clarke, chief executive of Tesco, said it is “likely but not certain” that the retailer will withdraw from its Fresh & Easy business in the US after kick-starting a strategic review.

An exit from the US is likely to result in the loss of hundreds of millions of pounds for Tesco.

Sir Terry took Tesco to the US in 2007 in the most ambitious move of his international expansion drive while chief executive. He appointed Mr Mason, his long-serving right-hand man, who helped to create Tesco’s revolutionary Clubcard scheme, to lead Fresh & Easy

However, the retailer is yet to make a profit from the California-based chain despite investing more than £1bn.

Mr Clarke said of the review: “This has not been an easy decision but I know it’s the right one.”

The Tesco boss, who took over from Sir Terry in 2011, said it was “my decision” for Mr Mason to leave. “As we head into the strategic review, I felt it would be inappropriate for Tim Mason to lead that review,” Mr Clarke added. “I wanted a fresh pair of eyes to lead the process.”

In his new book, Management in 10 Words, Sir Terry says he would accept responsibility if Fresh & Easy failed.

“If they [the critics of Fresh & Easy] are proved right, it will have been my responsibility as CEO and a clear example that goals are easy to set, incredibly difficult to achieve and must carry a clear accountability,” he writes.

Tesco investors have been calling on Mr Clarke to make a decision about the future of Fresh & Easy since he replaced Sir Terry.

The retailer will be advised by Greenhill on the review, which will consider a closure of Fresh & Easy, a sale, or a joint venture. Tesco says it has already received a “number of approaches from parties interested in acquiring either all or part of Fresh & Easy”.

Philip Dorgan, analyst at Panmure Gordon, said: “This hardly represents Tesco’s finest hour, but it is more about what it says about likely changes in management’s thinking.”

Shares in Tesco rose by 9.8, or 3pc, to 336.45p on the news. The positive reaction from the City to the US review was tempered by the departure of Mr Mason.

Investors in Tesco had hoped that the highly-rated Mr Mason, a marketing expert, may return to the UK to help the group’s ailing domestic business.

However, the 54-year-old has instead joined the growing list of executives who flourished under Sir Terry but have now left Tesco.

Mr Mason will be entitled to compensation of at least £1.35m, the equivalent of his annual salary and average cash bonus over the past two years. He also has a £9m pension pot, holds more than £6m of shares, and has £4m in long-term incentive plans.

Alongside the announcement on Fresh & Easy, Tesco reported a 2.4pc rise in sales during the 13 weeks to November 24.

However, this included a 0.6pc fall in like-for-like UK sales, highlighting the continuing pressure on Tesco in its home market. Mr Clarke said the performance of Tesco’s general merchandise business, which includes consumer electricals, was “not good enough”, with sales down almost 10pc.